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Markets

US natgas steadies as surging LNG exports offset milder weather view

  • Front-month gas futures settled mostly unchanged at $2.682 per million British thermal units, after slipping as much as 3.2% during the session.
  • At this point, the gas market is heavily influenced by the weather forecast concerning the short term price movement.
16 Dec, 2020

US natural gas futures steadied on Tuesday as record liquefied natural gas (LNG) exports offset forecasts for milder weather resulting in lower heating demand and a steady rise in output.

Front-month gas futures settled mostly unchanged at $2.682 per million British thermal units, after slipping as much as 3.2% during the session.

"At this point, the gas market is heavily influenced by the weather forecast concerning the short term price movement. As we still have a long winter ahead of us and the longer term weather is still uncertain, we will see some volatility," said Zhen Zhu, economist at Oklahoma City-based C.H. Guernsey.

Data provider Refinitiv predicted 421 heating degree days (HDDs) over the next two weeks in the Lower 48 US states, down from the 423 HDDs estimated on Monday. HDDs measure the number of degrees a day's average temperature is below 65 Fahrenheit (18 Celsius) and are used to estimate demand to heat homes and businesses.

Refinitiv said output in the Lower 48 US states averaged 90.8 billion cubic feet per day so far in December. That compares with a seven-month high of 91.0 bcfd in November 2020 and an all-time monthly high of 95.4 bcfd in November 2019.

The amount of gas flowing to US LNG export plants, meanwhile, rose to an average of 10.9 bcfd so far in December, which would top November's 9.8 bcfd record.

Refinitiv projected supply would fall from 99.5 billion cubic feet per day (bcfd) last week to 99.2 bcfd this week, before rising to 99.4 bcfd again in the next week.

With milder weather coming ,Refinitiv projected demand, including exports, would fall from an average of 124.5 bcfd this week to 122.5 bcfd next week. That forecast is lower than what Refinitiv expected on Monday.

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